Duplicative penalty on the same Cenvat credit cannot stand after prior adjudication of identical wrongful availment.

Duplicative penalty proceedings for the same wrongful availment of Cenvat credit cannot be sustained where the identical credit amount had already been included in earlier adjudication and disallowance. Once the very same credit had been subjected to prior proceedings, a second penalty on that amount was treated as unjustified. The penalty was therefore dropped, the impugned order was modified, and consequential relief followed in favour of the assessee.

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Issues: Whether penalty under Section 78 could be sustained when the same Cenvat credit amount had already formed part of earlier proceedings at another jurisdiction, resulting in duplication of proceedings.

Analysis: The same credit amount of Rs. 2,19,981 had already been included in earlier proceedings in which a larger credit demand was disallowed and penalties were imposed. Once the very same credit had been subjected to adjudication and disallowance, a second penalty on the identical amount for the same wrongful availment could not be justified. The proceedings were therefore treated as duplicative.

Conclusion: The penalty was not sustainable and was dropped, in favour of the assessee.

Final Conclusion: The impugned penalty order was modified and the appeal succeeded with consequential relief.

Ratio Decidendi: The same Cenvat credit amount cannot be penalised twice through parallel or successive proceedings for the same wrongful availment.

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